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Enormous upside bet on Weatherford

Posted
5/21/2013 11:12:00 AM
By: optionMONSTER
Referenced Stocks:WFT

Energy has been gaining favor, and now a giant bullish trade appears in Weatherford International.

optionMONSTER's Heat Seeker monitoring program detected the sale of 19,168 January 11 puts for $0.40. Shortly thereafter, 8,683 January 15 calls were bought for $1.43 and 8,516 January 16 calls were purchased for $1.07.

The trade cost about $1.39 million to implement and is highly bullish toward the oil-well servicing company. Selling puts generated income, which was used to buy the calls . The investor now stands to earn big profits if the stock pushes higher through early next year, but he or she also faces potential losses to the downside.

WFT is up 1.44 percent to $14.54 this afternoon and 16 percent in the last month. The shares formed a double bottom above $11 in March, which could make some chart watchers comfortable writing puts at that strike. (See our Education section for more on how to craft strategies around key price levels .)

Total option volume is 5.5 times greater than average so far today, according to the Heat Seeker.